Rockwell Collins Inc. COL reported financial results for third-quarter fiscal 2018 (ended Jun 30, 2018). The company’s adjusted earnings per share of $1.73 lagged the Zacks Consensus Estimate of $1.89 by 8.5%. Reported earnings, however, grew 5.5% from $1.64 per share a year ago.
Excluding the one-time items, the company reported GAAP earnings per share of $1.66 in the reported quarter, which increased 48.2% from the year-ago figure of $1.12.
Revenues
In the reported quarter, Rockwell Collins’ total sales was $2,208 million, missing the Zacks Consensus Estimate of $2,230 million by 1%. However, revenues grew 5.4% year over year, driven by higher sales across all its segments.
Operational Highlights
Total segment operating income during the quarter was $421 million, up 9.1% from $386 million in the year-ago quarter.
Rockwell Collins’ total research and development investment (including the increase in pre-production engineering costs) was $338 million, up 11.6%. The figure represented 15.3% of total quarterly sales compared with 14.5% in the year-ago period.
Interest expense during the quarter was $66 million compared with $77 million in the year-ago quarter.
Segmental Performance
Commercial Systems: In the quarter under review, segmental sales of $669 million were up 1.7% year over year, primarily owing to higher original equipment sales.
Operating earnings for the quarter were $148 million compared with $144 million in the year-ago quarter. Moreover, operating margin expanded 20 basis points (bps) to 22.1%.
Interior Systems: In the quarter under review, segmental sales of $659 million were up 2% year over year, primarily owing to higher interior products and services.
Operating earnings for the quarter were $106 million compared with $72 million in the year-ago quarter. Moreover, operating margin expanded 500 bps to 16.1%.
Government Systems: The segment reported sales of $684 million, up 12.9% on the back of higher government system sales, avionics as well as communication and navigation revenues.
Operating earnings for the quarter were $130 million, down 0.8% from $131 million in the year-ago period. Operating margin also contracted 260 bps to 19%, primarily due to higher company-funded R&D expense.
Information Management Services: Segment sales were $196 million, up from $183 million in the year-ago period, backed by growth in aviation related revenues.
Operating earnings for the quarter were $37 million, down from $39 million in the year-ago period. Operating margin was also 18.9% compared with 21.3% a year ago. This downside resulted from absence of a favorable resolution of certain international business jet support-service claims in the previous year.
Rockwell Collins, Inc. Price, Consensus and EPS Surprise
Rockwell Collins, Inc. Price, Consensus and EPS Surprise | Rockwell Collins, Inc. Quote
Financial Condition
As of Jun 30, 2018, Rockwell Collins’ cash and cash equivalents were $621 million compared with $703 million as of Sep 30, 2017.
Long-term debt (net) was $6,317 million as of Jun 30, 2018, down from $6,676 million as of Sep 30, 2017.
Cash provided by operating activities in the first nine months of fiscal 2018 was $196 million, compared with $416 million a year ago.
The company's effective income tax rate on adjusted earnings was 20.7% in the third quarter of 2018 compared to 27.1% in the prior year quarter.
Zacks Rank
Rockwell Collins currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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